PDPM and PDGM – Are You Ready?

And What Does it Mean for Therapists in Sub-acute Settings


By: Melinda Butler, OTD


As we embark upon the biggest change in Medicare reimbursement in over 20 years, many therapists are concerned about the security of their professions and their overall perceived value as a source of revenue within the workplace. Misconceptions include everything from “therapists will no longer be needed” to nursing care will now be the only source of reimbursement. Some therapists are nervously anticipating mass layoffs and pay cuts and many are concerned about the security of their professions in general. Well before you trade your gait belt for an apron and secure a job at your local coffee shop, there are some basic concepts regarding PDPM and PDGM that every therapist must know.

Let’s start with understanding what will NOT change:

  1. The Medicare skilled coverage criteria will not change. This mean that at the onset of skilled services under Medicare Part A, the beneficiary must have a skilled reason for services. That is, either a Nursing skill, a therapy skill, or both. Nursing skills would include the following: Tracheostomy, Ventilator, Infection Isolation, IV Antibiotics, Extensive Wound Care or medical management, and Enteral Feeding. Therapy skills would include significant decline in physical, verbal or cognitive function related to an acute medical onset. This criteria is exactly the same as it has always been. And based on what we know historically, if a patient has at least one of these nursing skills, there is a very good chance that physical mobility, ADL, cognitive and or communication functions will also be impacted. There is typically not a medical condition that results in a nursing skill that does not also present with a therapy skill. Therefore, assumptions that therapy will no longer be vital to sub-acute medical care are not accurate.
  2. Your patient demographics won’t change. This means that the referrals from hospitals, acute and sub-acute settings, and doctor’s offices are not going to change. However, there is a chance that you may begin encountering patients with higher acuity level or more clinical complexities because of new financial incentives for doing so.

Keeping these basic principles in mind should help to alleviate some of the stress surrounding the new reimbursement models. Now, let’s clarify some misconceptions about PDPM for skilled nursing facilities:

Myth #1: Therapists will no longer be needed.

False: Remember, Medicare patients will not change. Therefore, their needs won’t change either. A PT and OT ancillary will automatically be factored into reimbursement regardless of the presence of therapy. Why? Because historical data reveals, that the vast majority of patients admitted to skilled nursing facilities, receive therapy. This should not change with PDPM and PDGM. Those patients who meets skilled coverage criteria for nursing care, typically have physical, cognitive declines as well. Therefore, therapy services should be provided if they are reasonable and necessary.

Myth #2: Therapists can treat all patients concurrently or in groups as often as they like.

False: No more than 25% of the patient’s total time in therapy can be spent in the group or concurrent modes combined. For example, if a PT claim contains a total of 20 hours of PT, then no more than 5 hours of treatment can be billed to group or concurrent treatment modes combined. 

Myth #3: Speech therapy will be required to evaluate and treat all patients to maximize reimbursement.

False: Remember, skilled coverage criteria is not changing. Therefore, SLPs would use the same screening measures as before to determine whether or not skilled speech therapy services are indicated for speech, cognitive, or swallowing deficits.

Now let’s clarify some misconceptions about PDGM for Home Health Agencies:

Myth #1: Reimbursement for Home Health Services will be dictated by complex nursing needs, but not therapy needs.

False: PDGM uses several variables and adjustments to determine a Case Mix weight and score; which is subsequently used to determine payment for claims. One of the variables is functional impairment level. Therefore therapy needs are still very much considered. This system was developed to prevent the financial incentive of HHAs providing higher thresholds of therapy regardless of the patient’s needs.

Myth #2: Therapists will no longer be able to open the OASIS.

False: Skilled coverage criteria does not change with PDGM. Therefore, if the primary diagnosis to support the onset of services pertains to therapy needs and not nursing, then the OASIS will still be able to be opened by therapy.

Myth #3: Patients cannot be treated for more than 30 days.

False: With PDGM, the 60 day episodes are 30 day periods. However, this does not mean that services cannot be provided after 30 days. As always, if services are reasonable and necessary, they can continue past 30 day, and recertification can occur after 60 days. However, since historical data has supported that services are typically frontloaded in the first 30 days, then taper off, reimbursement will reflect this trend. Therefore, services that extend into the second 30 day period (late) will be reimbursed at a lower rate.

What will change with PDPM and PDGM?

In a nutshell, Resource Utilization Groups or RUG levels and overall incentives for high therapy minute thresholds is changing. Instead, reimbursement will be determined by the overall clinical needs of the patient. This is actually more logical and should result in two major benefits:

  1. Less pressure to provide high quantities of therapy minutes regardless of medical necessity.
  2. Incentive for sub-acute care settings to accept patients with higher medical complexities; regardless of therapy needs; thus minimizing the excessive cost of prolonged stays in acute settings due to lack of safe placement options.

What does PDPM and PDGM mean for therapists?

There is no easy answer to this question because this will vary among providers. Some might see this as an opportunity to conserve therapy costs. Let’s face it, any savvy business owner/manager seeks ways to decrease expenses and increase revenue. Reducing therapy labor costs is a one way to do so. Therefore, there are many ethical implications to consider. In the SNF setting, for example, considering the fact that there is not presently a penalty in place for exceeding the 25% combined concurrent and group therapy limit, some SNF providers may encourage, or even require therapists to exceed this limit. However, providers will receive a warning edit on their assessment validation report informing them that they have exceeded the 25% limit. The warning will state: “The total number of group and/or concurrent minutes for one or more therapy disciplines exceeds the 25 percent limit on concurrent and group therapy. Consistent violation of this limit may result in your facility being flagged for additional medical review.” CMS will monitor therapy provision under PDPM to identify providers that exceed the limit, and determine if additional administrative or policy action would be necessary.

In HHAs, since payment for HHA services are bundled and there is no longer financial incentives for high therapy visit thresholds under PDGM, some providers may be tempted to minimize therapy services even if they are reasonable and necessary.

While some agencies will seek methods for minimizing therapy labor costs, the fact remains that providers are still held to the standards of the Medicare Policy Manual and Value-Based Purchasing. This means that providers are reimbursed for services that are reasonable and necessary and rewarded or penalized by improved performance standards. While this accountability practice directly impacts hospital settings and part B claims, it will indirectly impact sub-acute settings who are billing to Medicare Part A. How? Acute care providers want to send their patients to the highest performing sub-acute settings. This will minimize the risk for hospital readmission and result in higher overall patient outcomes; hence financial reward. Therefore, to align with the Value-Based Purchasing model, providers have been forming partnerships and establishing preferred provider networks with sub-acute settings that produce great outcomes. If SNFs and HHAs minimize the reasonable and necessary services, their outcomes will suffer and so will their referrals.

PDPM commences on October 1, 2019 and PDGM on January 1, 2020. It is imperative that therapists have a good understanding of the basic principles of Value-Based Purchasing, PDPM and PDGM and how they impact therapy. It is also important for therapists to learn simple, yet effective strategies for advocacy and treatment planning to improve outcomes, as well as ethical implications to consider. To prepare for this major shift in the Medicare fee schedule, a two-hour live Webinar will take place on Thursday, September 12, 2019 at 6:00 pm EST brought to you by Summit Professional Education. Therapy is and will always be a vital member of the interdisciplinary care team! So before you change careers from therapist to Barista, join me on September 12, 2019! To learn more about this webinar, click here!


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